Regional Standards Update 3-26-13

With less than six weeks to go before the May 1 compliance date for the Department of Energy’s regional standards requiring condensing furnaces in 30 northern states, many contractors have questions about the status of the rules and the proposed settlement agreement in an ongoing lawsuit challenging those rules.

To be clear, the new furnace standards mandating that all residential non-weatherized natural gas and mobile home furnaces installed in the Northern region be at least 90% AFUE are still set to go into effect on May 1, 2013.

However, if the U.S. Court of Appeals for the D.C. Circuit accepts a pending settlement agreement in a federal lawsuit against the new rules, they would be rescinded.

The settlement agreement was filed with the Court on January 11, 2013, after several months of mediation discussions between the American Public Gas Association, the organization challenging the rules, and the Department of Energy, the agency that finalized them in October of 2011.

Intervening parties with a stake in the outcome of the lawsuit filed motions in support and in opposition to the settlement agreement. The Court must consider these motions before ruling.

As of today (March 26), the Court has yet to rule on the settlement agreement. A ruling on the settlement agreement could come at any time.

In a recent development, last week the Air-Conditioning, Heating, and Refrigeration Institute (AHRI) filed a motion requesting the Court to “stay the federal minimum efficiency standards for residential non-weatherized gas furnaces pending judicial review; and grant an extension of the May 1, 2013, compliance date should the Court uphold the furnace standards on the merits.”

The motion is intended to provide relief to the HVAC industry manufacturers, distributors, and contractors from the uncertainty of the new furnace standards that are set to go into effect in without an enforcement program.

In letters sent on July 30, 2012, and more recently on February 27, 2013, AHRI wrote to Secretary of Energy Steven Chu, to petition the DOE to postpone the May 1, 2013, compliance date for 18 months. The American Gas Association also petitioned DOE to delay the dates in December 2012. There has been no response from DOE on any of these petitions.

In requesting the Court to intervene, AHRI argues that postponing the May 1, 2013, compliance date is a reasonable approach to alleviating the harms, burdens, and confusion in the HVAC marketplace. With the pending settlement agreement still in limbo, manufactures, distributors, and contractors face the possibility of new regulatory liabilities, and the prospect of stranded inventories.

Interveners have 10 days to file response motions in support or opposition to the motion. ACCA will be filing a response motion in support of AHRI’s motion.

In the meantime, until the Court accepts this settlement, the underlying standards that require 90% AFUE for residential natural gas furnaces in the North region beginning May 1, 2013, are still in effect. It’s impossible to predict when the Court will rule on the settlement agreement or the AHRI motion to delay the compliance date. The prudent thing to do is assume nothing will change with regard to the rules.

ACCA members will be notified by email alert with any updates or news about the settlement.

Charlie McCrudden is ACCA Vice President for Government Relations.

Regional Standards Update 5-01-13

This morning, an emergency Motion to Stay was granted by a U.S. Court of Appeals in the ongoing Regional Standards lawsuit. This motion legally forbids the Department of Energy (DOE) from enforcing the furnace standard in the Northern Region, which was to take effect today, while legal efforts continue. Previously, DOE had stated they would not enforce the standard on the effective date (May 1) via a policy statement, leaving open the slim possibility that DOE could change their minds and begin enforcing the standard. This Motion to Stay removes all doubt and should provide a greater level of certainty for distributors as they continue to make decisions regarding their inventory.Additionally, the Motion states that if the Court were to decide that the standard should be upheld, there would be a six month delay before DOE could begin enforcing the standard.

Regional Standards Update 5-16-13

Regional Standards---They aren't dead, and we can't forget about them just yet.

On May 1, 2013, an emergency Motionto Stay was granted by a U.S. Court ofAppeals in the ongoing RegionalStandards lawsuit. This motion legallyforbids the Department of Energy(DOE) from enforcing the furnacestandard in the Northern Region whilelegal proceedings continue to challengethe validity of the Regional Standardsrule making process. The new standardshad been scheduled to take effect onMay 1, 2013.It’s important to remember that thecourt has NOT made a final ruling onthe validity of the Regional Standards.

If the court rules in our favor, the DOEcan then choose to go through theentire rule making process again, butthis time they will have to do it in strictaccordance with the processes thatgovern how such rules and regulationsare drafted, approved, implemented,and enforced.The worst case scenario would be if thecourt does eventually rule in favor ofthe Regional Standards, per the May 1,2013, Motion to Stay, there would be asix month delay before the DOE couldbegin enforcing the standard.